John G. Sperling founded the Institute of Professional Development - in the burgeoning
field of for-profit higher education - in 1973, while teaching at San Jose State.
He later began what became the University of Phoenix, which was accredited in 1978
by the North Central Association of Colleges and Schools. In five years ending last
December, the University of Phoenix added 42 learning centers to 23 already in place.
With more than 40,000 students, it is the largest accredited private university in
the nation. This interview was conducted by National CrossTalk correspondent Carl
Irving.

Carl Irving: Your new approaches to higher education have clearly appealed to
older, working, more focused students. Does that mean you have exposed some fundamental
flaws in traditional non-profit colleges and universities?

John Sperling: We started this in 1972 - 73. I had to create a model to
address needs in ways that simply were not traditional. This offended traditionalists,
some of whom were bitterly opposed to what I had created. They did everything they
could to say (my approach) was illegitimate.

To oppose a measure we had introduced to deal with this issue, they argued that
if restrictions weren't maintained, diploma mills would come into California. By
implication we were a diploma mill. Stories were planted in the newspapers to that
regard.

That gives you some idea of the vehemence and fear these people saw in this new
model. I had been an academic for 20 years and therefore could understand how they
felt. It isn't that I sympathized with them, but I certainly could understand their
feelings. It just boiled down to: Are you going to serve this population, is it a
legitimate population to serve, and if it is, do you have to have a model that allows
you to serve it?

CI: How do you define this population?

JS: Working adults who haven't finished their bachelor's degrees, or who
want a master's degree. They're working full time and, as one of our students said,
they've got kids, they've got dogs, they've got lives and you've got to fit the education
into these complex lives.

People commute to Silicon Valley all the way from Santa Cruz. They have a three-hour
commute every day. They have to worry about all sorts of things. They are adults
leading complicated, or if not complicated, certainly time-constrained lives.

CI: Why didn't traditional institutions become aware of this?

JS: They might have become aware of this, but you've got to understand
that institutions of higher education have been operated for the benefit of the faculty.
The faculty, I suppose those at any college or university worthy of the name, thought
of themselves as creators of new knowledge, and to do that you had to do research
and writing, teaching being secondary.

For instance, when I was at Berkeley as a graduate student, the professor came
in and he gave three lectures a week and maybe a seminar. That was it, and all the
teaching was by myself and this army of my fellow teaching assistants.

I knew something about the subject matter, but I didn't know a thing about teaching.
But I'm not so sure the professor knew any more about teaching than I did, because
that was not the way he defined his professional life.

So why should they bother about this other population? For instance, they would
have to teach at night. Well, they want to go home to study and write and don't want
to be bothered with students.

CI: Did you find this to be true later, when you were a professor at San Jose
State?

JS: San Jose State College moved from a normal school to a state university,
and everyone wanted to write, to be published, to be recognized in his or her profession.

CI: But aren't researchers the best teachers?

JS: Knowledge now is so universally available that you would have to be
creating some very esoteric new knowledge to be in a position where the students
would be the ones to be the primary beneficiaries.

CI: Could you say that your faculty are out there every day learning on the
job and thus are more proficient in what they teach?

JS: Well I did have one professor at Berkeley who influenced me greatly.
He was a history professor who defined history as the usable part of the past, and
I define each of the subject matters that we deal with at the University of Phoenix
in terms of what is the usable part of that particular body of knowledge. Our students
are busy. They are not here simply to expand their horizons; their horizons are pretty
wide already.

They've formulated their basic philosophy in life. They've decided whether they're
Democrats or Republicans. Their social sensitivities have been formed. To treat them
like 17- or 18-year-olds was not only futile, it was demeaning. What they needed
was the usable part of the bodies of knowledge that were included in any subject
matter that was being dealt with.

CI: How do you define a BA? Granted, your students are more mature, but don't
they also need some expansion of their minds?

JS: Remember, I'm talking about undergraduate study. It's only been in
the last couple of years that we give lower-division courses. So all of our students
had had their general education requirements before they came to us. Now that we've
begun to deal with younger students, we have a dean of general education, who is
responsible for the philosophy, the sociology, the English, the biology and the various
other courses.

All of our upper-division courses are professional, so we are not trying to turn
out sociologists or political scientists, or historians. We're trying to turn out
business administration majors, nurses, counsellors, teachers.

CI: Don't upper-division majors also take political science or economics?

JS: Not very often. But obviously we have economics, although we aren't
training economists. We're training managers, who have to have the knowledge of business
and accounting. When you turn out a person whom you expect to be a competent manager,
the two years of a full set of courses is just barely enough, in my opinion.

CI: How do you define a BA for a business major?

JS: If you look at the Chronicle of Higher Education or various higher
ed "think tanks" or study centers, they have determined that there's no
consistent definition of a BA. It simply doesn't exist. A BA is what any college
or university says it is, when a student receives a degree.

CI: Couldn't one argue that there is some general consensus beyond anything
written in stone?

JS: No. There is no general consensus.

CI: How do you maintain standards regarding faculty, students, grading? How
can you do this nationally, let alone overseas where you now intend to expand?

JS: We have a system that is scalable. It's replaceable. And it includes
standardized curriculum, a method for hiring faculty, training faculty, including
all of the skills we expect an instructor to have in a classroom, including judging
skills and grading of student work.

Clearly, as is widely recognized by those familiar with it, we have the nation's
most sophisticated quality management system in higher education.

CI: How do you arrive at that conclusion?

JS: We measure everything, and we have won several national awards for
doing so with precision. We measure faculty performance every five or six weeks.
We measure student performance every five or six weeks. We measure at least every
quarter, the performance of academic counselors, of financial aid counselors, of
the various administrative officers at each of the campuses.

We took the concept of continuous improvement and we applied it to our particular
industry, which is higher education. It's not the same as Motorola, where they manufacture
cell phones and computer chips. But Motorola in what you would call its soft areas
- its research, administration, human resources - still strives for what they call
"six sigma," and that's one error out of every million processes.

CI: But aren't Motorola's operations much less complex than yours?

JS: I don't think so. Research, development, administration - those are
just as humanly complex as higher education.

CI: How about the huge regional differences and demands in this nation? Can
you respond to these with a single concept?

JS: I think that in the U.S. we have a common culture. We haven't found
that the material we prepare for Los Angeles is any different from what we need to
prepare for Detroit or Seattle.

CI: What about overseas?

JS: I'm not responsible for that. The president of the university [Jorge
Klor de Alva, an old Sperling friend who left an endowed chair at Berkeley to take
the post this past February] will be responsible for that, and I'm sure that there
will be a need for localization.

CI: You've been to China...

JS: I can see eventually the University of Phoenix might develop a land-based
program in China. But it would not be run by Americans. It would be run by Chinese.
We would take the model to China and the Chinese would operate it.

The Chinese people in industry have been very favorably disposed toward our model.
But of course there is a vast government bureaucracy, so it wouldn't be practical
at this time. However, they believe that electronically delivered education would
be practical.

JS: Our online program, with 6,000 full-time-equivalent students, is the
largest online program in the country. We've been doing it for ten years now.

CI: It is making money?

JS: Oh yes. There's a very simple system: We decide the [profit] margin
that we want, and then we price the product to provide the margin. If we can't sell
that product at that price, we don't produce it.

CI: Since you are a for-profit school, are teachers under pressure to pass
their students?

JS: I don't think our faculty members are under pressure. We operated tech
schools at one time, we had six of them, and it's not the same population. Our average
student has been working seven or eight years. He or she's got a family income of
$55,000 to $60,000, so there's a great deal of difference between that individual
and a 17-year-old coming in and trying to learn something about widgets.

We have a highly disciplined student population. They expect a lot from the instructor.
Instructors don't get to slide. Students are much more demanding. If a student fails,
probably the instructor doesn't even have to fail him. That's because students are
required to be members of study groups, and a non-performing student in a study group
is expelled by the group. And they always drop out if they are expelled.

CI: That's quite a jump - that students themselves dismiss a fellow student.

JS: When a student is asked to leave a study group, any other group will
ask "Why didn't you keep this person?" Because he didn't do the work.

We've had a couple of court cases in which students say you required me to be
a member of a study group, so you must provide me a study group. Our response is
that it's plainly set forth in all of the documents - you'll be a member of a study
group, and if you can't hack it, well then, it's your problem.

Almost all of our students come from industry, and they're all working, and in
almost every industry people work in groups. If you work at Intel, if somebody's
dogging it, you're not going to put up with it, because your job is at risk.

CI: What portion of your students are funded by their employers?

JS: Seventy percent of them receive all, or a portion, from their employers.
The total fully supported ranges close to half of all the students.

CI: Is it true that no higher education system has ever been profitable before?

JS: I think it's summed up in the fact that our system is designed as a
production function, with specialized learning outcomes, and those outcomes we believe
are equivalent to, or better than, the outcomes in traditional education. Then we
design a system the least costly way. We deliver the services that achieve those
outcomes.

CI: Some for-profit HMOs have damaged health care. Is there any parallel to
fear here?

JS: No. First, we have a comprehensive quality assurance system in place.
We deliver a service and we price it correctly. They don't have to come. So it's
not analogous to an HMO.

CI: You were a professor of humanities at San Jose, and earned a Ph.D. from
Cambridge in economic history. Don't you want to expand your academic offerings?

JS: We respond to the market. In California, let's say, it's probably the
case that state funded systems won't be able to provide the educational services
demanded by the population. So there should be probably several hundred thousand
students a year who aren't able to gain admission. That's why I think our lower-division
programs as general education programs might be very popular there.

Once the general education requirement is met, students either enter into one
of our professional programs or they transfer into a more traditional college, if
they want to be a sociologist, a political scientist, study English or something
else.

CI: At this point, are you cutting into enrollments of traditional institutions
or serving a new market?

JS: I think what we are serving is a new market, and traditional institutions
are coming into the market we defined and serve. Practically every college and university
in California has what I call a copy-cat program based on the University of Phoenix
design. Imitation is the greatest form of flattery.

CI: How about your programs to train teachers?

JS: We have fairly significant programs in Arizona, Colorado, New Mexico
and Utah. In California, institutions are trying to maintain their monopoly in teacher
training. It's no different from the battles of the early 1980s, attempting to protect
the markets of established institutions.

CI: Do you expect these barriers to disappear?

JS: Economic analysis shows that the behavior of these colleges and universities
is identical to those of industry when facing outside competition. As Adam Smith
said, whenever you have two businessmen together, you have the beginning of monopoly.
So they're simply behaving in a very predictable and rational way.

They will use the law, they will use regulations, they will use every technique
they can, to protect their market. That's the way the world operates.

CI: Do schools hire teachers in states where you are allowed to train them?

JS: They are snapped up as quickly as they are produced. These are post-baccalaureate
programs. They all have BAs and we award credentials.

CI: Do you try to overcome opposition?

JS: We have three full-time people dealing with regulatory barriers, two
national lobbyists and 30 lobbyists at work in the various states. There's a vast
regulatory mechanism designed to protect markets, and our job is to find a way either
to go over, around or, if need be, knock 'em down.

The most recent case of that was in Pennsylvania, where there was a law against
for-profit entities offering degrees. It took us three years, but we got a law through
the Pennsylvania legislature that rescinded that requirement.

CI: Do you compete with public and private campuses for the best students?

JS: They're moving into an area that we defined. So we are all competing
for students in that market.

CI: Aren't you competing for older students? The average age of students at
the California State University campuses (the largest four-year degree granting system
in the nation) is more than 27 years.

JS: For the most part our students are full-time, managerial employees.
You could not work full-time and be a manager if you are a student at a Cal State
campus which offers courses during the day. They are structured for youthful, full-time
students, and adult students have to adapt to that system.

Any institution that tries to do everything probably doesn't do everything well.
So we've defined our niche, as it were. We've defined our market, and we try to do
that absolutely as best as we can.

CI: Still, where does the traditional concept of the well-rounded student fit
into your system? Given your own academic background, don't you have concerns for
that?

JS: Having taught at San Jose State for a long time, I can say that very
few students graduate well rounded in western or global civilization. It was spotty
at best. The only students who were well-rounded were the honor students in humanities
programs, which constituted half of their coursework for two years.

BAs come in all shapes and sizes. I doubt that even Princeton or Harvard produces
well rounded students anymore. Students now are so sophisticated when they come in,
and a lot of them have a very good idea of what they want. And if they're married,
they want to study bits and bytes.

If they're of a scientific bent, they want to dip right into that. And there's
so much information available. And so many venues are available that students can
get educated in all sorts of ways.

I just don't think the old paradigms hold anymore. Knowledge has begun to democratize
and commoditize and it's just too widely available to say anyone will be able to
say, "Come here and we'll provide it for you."

CI: Isn't that a worrisome thought?

JS: Life is worrisome. Life is adventure. If you think we're having trouble,
how'd you like to be in Indonesia today?

CI: A history professor turned you on at Berkeley, right?

JS: I'm sure our instructors turn our students on.

CI: But you don't have a history professor.

JS: We have history surveys in (lower-division) general education and our
instructors are quite competent.

CI: You're setting precedents that draw wide attention.

JS: What we do, we define very clearly. People know what we do, and we
try to do it very well. So we'll take care of our knitting, and if the critics will
take care of their knitting, the world will probably be a better place.

Photo by Jeff Topping for CrossTalk

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American Higher Education:Journalistic and Policy Perspectives from National CrossTalk